Home | Blog | US Treasury Issues Final Regulations: Guidance on Reporting Interest of Non-Resident Aliens

US Treasury Issues Final Regulations: Guidance on Reporting Interest of Non-Resident Aliens

In August 2010 the US Congress passed legislation (known as FATCA) that requires foreign financial institutions and companies that invest in the US to report to the IRS their US account holders and investors. Failure for these companies to comply with this requirement will result in a 30% US tax on their US income and gains on US assets.This legislation will come into force soon.

As a result foreign institutions have already begun the process of identifying their US account holders and investors.

Consistent with its efforts under FATCA and as part of its efforts to combat tax evasion, the Treasury Department issued regulations on April 17th (T.D. 9584) that require financial institutions with offices in the United States to report to the IRS the payments of as little as $10 of interest to non-resident aliens who reside in certain treaty countries; even though generally such interest is not subject to US income tax!

Interesting—the new regulations do not require the financial institution to inform its account holders that this information is being provided to the IRS.

The United States has a number of tax treaties with countries throughout the world. These treaties provide for a “sharing” of information between the countries. Clearly the IRS will use the information gleaned from this new reporting requirement to strengthen its information sharing arrangements with its treaty partners.

The new regulations come into effect with respect to interest paid after January 1, 2013.

Here to Help

Here to Help

Contact one of our specialists

London
USTAXFS
3 Harbour Exchange Square
London E14 9GE
United Kingdom

T: +44 20 7357 8220

F: +44 20 7357 8225

Email Us

Zurich
USTAXFS
Brandschenkestrasse 20
CH-8001 Zurich
Switzerland

T: +41 44 387 8070

F: +41 44 387 8079

Email Us

Geneva
USTAXFS
Rue de-Candolle 19
CH 1205
Geneva
Switzerland

T: +41 22 700 2500

F: +41 22 700 2526

Email Us

Middle East, Asia and the Americas
US Tax & Financial Services GmbH
Löwenstrasse 28
PO Box 1367
CH-8021 Zurich
Switzerland

T: +41 44 387 8070

F: +41 44 387 8079

Email Us

Nordics
USTAXFS / MAJATTORNEY
Norra Skeppsbron 5B
SE 803 10, GAVLE
Sweden

T: +46 26 18 82 22

M: +46 70 61 88 016

Email Us

Read Services in :EnglishFrenchItalianGerman